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Marketing startegy of nestle bangladesh ltd. Document Transcript

  • 2. REPORT ONLOCAL BUSINESS POLICIES OF NESTLÉ BANGLADESH LTD PREPARED FOR: Dr. Shibli Noman Khan Lecturer Department of Business Administration Independent University, Bangladesh PREPARED BY: Alif Al Mohammed Shalahuddin ID: 1221557 MBA 509 Department of Business Administration Independent University, Bangladesh Date: 30 July 2012
  • 3. Letter of Transmittal30th July, 2012Dr. Shibli Noman KhanAsst. ProfessorDepartment of Business AdministrationIndependent University Bangladesh,Subject: Submission of Term paperDear Sir,It’s our great pleasure to submit the Report on Nestle Bangladesh Ltd. A study was making on acompany that you have asked to prepare to study. I have tried our best to follow the instructionthat was given by you. Throughout this study I tried to identify how Nestle operating their localbusiness being a multinational company in Bangladesh.I sincerely hope that you will enjoy this report as I enjoyed while writing it. If you need anyfurther clarification or quarry in interpreting this analysis, we will be glad to oblige you.Thank you,Alif Al Mohammed ShalahuddinID: 1221557MBA-509
  • 4. Table of ContentsParticulars PageABSTRACTPART ONE: INTRODUCTION TO REPORT 02-03 Origin of the Report 03 Objective of the Report 03 Scope and Limitation 03PART TWO: NESTLÉ BANGLADESH LTD. 04-13 2.1 Introduction 03 2.2 History of Nestlé 04 2.3 Global Brand of Nestlé 09 2.4 Nestlé in Bangladesh 10 Customers of Nestlé Bangladesh Limited 11 Functions of Nestlé Bangladesh 12 Products of Nestlé Bangladesh 13PART THREE: ORGANIZATION STRUCTURE OF NESTLÉ 14-16 3.1 Global Organization Structure of Nestlé 15 3.2 Organization Structure of Nestlé’s in Bangladesh 16PART FOUR: STRATEGY OF NESTLÉ 17-35 4.1 Key Success Factors 18 External factors 18 Internal factors 18 4.2 Marketing Strategy 20 Market Segmentation 20 Target market 20 Positioning strategy 20 Advertising and Promotional activities 21 Medium Responses 22 4.3 Competition Structure 23 4.4 Nestlé’s Consumer Communication and Relationship 24 4.5 Retaining Old Customer or Attracting New Ones? 26 Customer Satisfaction Level 26 4.6 Market Audit 27 External Audit 27 Internal Audit 27 4.7 Nestlé’s Commitment to Environmentally Sound Business Practices 30 4.8 The Supply Chain 31 Raw Materials 31 Manufacturing 31 Distribution Marketing 33 4.9 What Makes Nestlé to Become Nestlé? 34 Medical support 34 Food support 34 Sports Development Programme 34 4.10 Conclusion 35PART FIVE: APPENDICES 36 References 37
  • 5. Table of FiguresParticulars PageFigure 01: Sales Regions 11Figure 02: Sales Process 11Figure 03: Organizational Functions 12Figure 04: Nestlé Brands in Bangladesh 13Figure 05: Global Organizational Structure 15Figure 06: Organizational Structure in Bangladesh 16
  • 6. AbstractThe study seeks to identify the local business policies of Nestle Bangladesh Ltd. as amultinational company. How they operate their business in Bangladesh being a multinationalcompany to compete with their local competitors. To operate their business how they developtheir strategy to gain the competitive advantage.In details the study aimed to identify the business policy and their strategy in Bangladesh. Whatis there key success factors, marketing strategy, competition structure, market audit as well ashow they develop their market segmentation, target market, positioning strategy, advertising andpromotional activities and what is the output. 1 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 7. Part One: Introduction to Report 2 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 8. Origin of the ReportDuring the summer’2012 semester of MBA program of Independent University, I was requiredto do a term project in the course International Marketing (MBA 509). This course is designed togive the business students an understanding international marketing that is necessarytounderstand the in department of international marketing concepts applied by companies. Out ofseveral options of the term project topics, I have chosen a company ‘Nestlé Bangladesh Ltd.’ forthe term project.Objective of the ReportTo prepare and submit the term project within specified time. To have a very practical idea andover viewing the marketing sector focusing on a specific company and their performance inBangladesh. Present company’s current mission, vision, objectives, and goals. Find out theirstrength, weakness, opportunities, threats. Defining their market segmentation, target market andproduct positioning and key marketing areas. Source of information the report is originated fromboth primary and secondary data source.  Primary data: Face to face conversations with employees. By arranging appointment with top officials of the company.  Secondary data: Company’s reports and other published materials various marketing books, personal interview with a Nestlé professional.Scope and LimitationThere was great difficulty of finding appointment of the top officials of Nestle although talkingto the officials interviewing few personnel of top management and talking to personal referenceswas helpful, still we could not cover in depth analysis on the above mentioned topic. Gettingrelevant papers, documents, information were strictly prohibited. The officers were hesitant toreveal the information in regard of confidentiality Unavailability of financial data as Nestlé doesnot publish financial report to the public.  For the confidentiality concern, access to some information was not available.  Restriction on time and resources of data due to absence of corporate website in 3 Page BangladeshLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 9. Part Two: Nestlé Bangladesh Ltd. 4 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 10. 2.1 IntroductionToday’s Nestlé, the worlds largest food and nutrition company, founded by the Henri Nestlé (10August 1814 – 7 July 1890); a German confectioner in Vevey, Switzerland in 1866. In the foodindustry Nestlé is the most trusted name with high quality products. ―Good food Good Life‖ isthe mission of Nestlé, which drives the company to provide consumers with the best tasting andmost nutritious choices in a wide range of food and beverage categories and eating occasions.The vision of ―creating shared value‖ and the very own ―Corporate Business Principles‖shaped the company culture and made them a reliable investor over 86 countries of the world.Today Nestlé employs around 280000 people and have factories or operations in almost everycountry of the world with a total equity of CHF 62.60 billion. 5 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 11. 2.2 History of Nestlé1866-1905: Henri Nestlés quest for a healthy, economical alternative to breastfeeding is theimportant factor that drives the history of Nestlé Company. Henri Nestlé, pharmacist, beganexperimenting with various combinations of cow milk. His ultimate goal was to help combat theproblem of infant mortality due to malnutrition. People quickly recognized the value of the newproduct, as Nestlés new formula saved the life of children within a few years. In August, 1867Charles and George Page, two brothers from Lee County, Illinois, USA, established the Anglo-Swiss Condensed Milk Company in Cham. In 1877 Anglo-Swiss added milk-based baby foodsto their products and in the following year the Nestlé Company added condensed milk so thefirms became direct and fierce rivals. Henri Nestlé retired in 1875 but the company under newownership retained his name as FarineLactée Henri Nestlé. Their headquarters in Glendale,California, USA.1905-1918: The Company formed by the 1905 merger was called the Nestlé and Anglo-SwissMilk Company. Most production facilities remained in Europe, however, and the onset of WorldWar I brought severe disruptions, as a result acquiring raw materials and distributing productsbecame increasingly difficult. At the same time the war created tremendous new demand fordairy products, largely in the form of government contracts. By wars end, the Company had 40factories, and its world production had more than doubled since 1914. Moreover in this periodNestlé added chocolate to its range of food products and also the Condensed-milk exportsincreased rapidly as the Company replaced sales agents with local subsidiary companies. In1907, the Company began full-scale manufacturing in Australia.1918-1938: The end of World War I brought with it a crisis for Nestlé. Rising prices for rawmaterials, the worldwide postwar economic slowdown, and declining exchange rates made thesituation worst. In 1921, the Company recorded its first loss. Nestlés management brings LouisDapples as an expert to deal with the situation; his rationalized operations and reduction of thecompanys outstanding debt improve the financial condition. On the other hand Nestlés firstexpansion beyond its traditional product line came in 1920s by producing chocolates. In themeantime Brazilian Coffee Institute first approached to Nestlé in 1930 to reduce Brazils large 6coffee surplus, after eight years of research Nestlé came with Nescafé became an instant success. PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 12. 1938-1944: in this period World War II were felt immediately upset the business once again andProfits dropped from $20 million in 1938 to $6 million in 1939. To overcome distributionproblems in Europe and Asia, factories were established in developing countries; particularly inLatin America. As the end of the war approached, Nestlé executives found themselvesunexpectedly heading up a worldwide coffee concern, as well a company built upon Nestlésmore traditional businesses.1944-1975: The graph of growth sets its trends little higher between 1944 and 1975. As a resultmany new products were added as and outside companies were acquired. In Nestlé merged withAlimentana S.A in 1947, purchase of Findus frozen foods occurred in 1960, Libbys fruit juicesjoined the group in 1971 and Stouffers frozen foods in 1973and finally in 1974 the Companybecame a major shareholder in LOréal, one of the worlds leading makers of cosmetics. TheCompanys total sales doubled in the 15 years after World War II.1975-1981: In 1920s the economic situation was in challenge due to price of oil rose, growth inthe industrialized countries slowed down and worldwide unstable political situation. In 1975 and1977 price of coffee bean and the price of cocoa tripled. In this situation to maintain a balance,Nestlé went to second venture outside the food industry by acquiring the pharmaceutical andophthalmic product producer Alcon Laboratories Inc. of U.S; as a result it increased competitionand shrink the profit margins.1981-1995: Improvement of financial situation through internal adjustments and strategicacquisitions are the two important moves in this period. As a result between 1980 and 1984,diversification of several non-strategic or unprofitable businesses occurred. On the other handNestlé managed to put an end in the third World to about a serious controversy over itsmarketing of infant formula in this period. In 1984 Nestlé acquire American food giant Carnationand became one of the largest company in the history of the food industry.1996-2002: The opening of Central and Eastern Europe, along with China and a general trendtowards liberalization of direct foreign investment was good news for the company. On the other 7 Pagehand in July 2000 Nestlé launched a Group-wide initiative called GLOBE (Global BusinessLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 13. 8 Excellence) aimed to simplifying business process. Two more acquisitions took place in thisperiod-U.S. ice cream business was to be merged into Dreyers and the acquisition of ChefAmerica, Inc. a leading U.S.-based hand-held frozen food product business.2003-2009: Within this area the acquisition of Mövenpick Ice Cream, Jenny Craigand UncleTobys enhanced Nestlés position as one of the world market leaders in the super premiumcategory. On the other hand Novartis Medical Nutrition, Gerber and Henniez join the Companyin 2007. Meanwhile Nestlé entered into a strategic alliance with the BelgianchocolatierPierreMarcolini at the end of 2009.2010 to onward: In mid-2010 Nestlé finalized the sale of Alcon to Novartis; at the same timeNestlé bought Kraft’s frozen pizza business. Another important move in this period is launch ofSpecial. Tea machine system and the completion of the CHF 25 billion share buyback program 8 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 14. 2.3 Global Brand ofNestléThe brand portfolio delivers the message once again how big Nestlé in the food industry. It is thetrust and effort of the Nestlé professionals which created the win wining scenario. Today Nestlécovers almost every food and beverage category – giving consumers tastier and healthierproducts. 1. Baby foods: Cerelac, Gerber, Gerber Graduates, NaturNes, Nestum 2. Bottled water: Nestlé Pure Life, Perrier, Poland Spring, S.Pellegrino 3. Cereals: Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, Nesquik Cereal 4. Chocolate & confectionery: Aero, Butterfinger, Cailler, Crunch, Kit Kat, Orion, Smarties, Wonka 5. Coffee: Nescafé, Nescafé 3 in 1, Nescafé Cappuccino, Nescafé Classic,NescaféDecaff, Nescafé Dolce Gusto, Nescafé Gold, Nespresso 6. Culinary, chilled and frozen food: Buitoni, Herta, Hot Pockets, Lean Cuisine, Maggi, Stouffers, Thomy 7. Dairy: Carnation, Coffee-Mate, La Laitière, Nido 8. Drinks: Juicy Juice, Milo, Nesquik, Nestea 9. Food service: Chef, Chef-Mate, Maggi, Milo, Minor’s, Nescafé, Nestea, Sjora,Lean Cuisine, Stouffers 10. Healthcare nutrition: Boost, Nutren Junior, Peptamen, Resource 11. Ice cream: Dreyer’s, Extrême, Häagen-Dazs, Mövenpick, Nestlé Ice Cream 12. Petcare: Alpo, Bakers Complete, Beneful, Cat Chow, Chef Michael’s Canine Creations, Dog Chow, Fancy Feast, Felix, Friskies, Gourmet,Purina, Purina ONE, Pro Plan 13. Sports nutrition: PowerBar 14. Weight management: Jenny Craig 9 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 15. 2.4 Nestlé in BangladeshPopular Nestlé brands started entering this part of the sub-continent during the British rule andthe trend continued during the pre-independence days of Bangladesh. After the independence in1971, Nestlé World Trade Corporation, the trading wing of Nestlé S.A, sent regular dispatch ofNestlé brands to Bangladesh through an array of indentures and agents and some of the brandssuch as NESPRAY, CERELAC, LACTOGEN, and BLUE CROSS etc. became some verycommon products.Nestlé Bangladesh Limited started its commercial operation in Bangladesh in 1994. Its totalauthorized capital is TK1.5 billion and total paid up capital is TK 1.1 billion. The only factory ofthe company in Bangladesh is situated at Sreepur, 55 km north of Dhaka. The factory producesthe instant noodles and cereals and repacks milks, soups, beverages and infant nutrition products.Today Nestlé Bangladesh Ltd. is a strongly positioned organization. The Company iscontinuously growing through the policy of constant innovation, concentrating on its corecompetencies and its commitment to high quality food to the people of Bangladesh.Since the beginning of Nestlé’s operation in Bangladesh, the chairman of the company has beenMr. LatifurRahman, one of the top industrialists of the country, his firm Transcom used to importthe products of Nestlé. His business house Transcom is still involved in wide range of businesslike beverage, pharmaceutical, electronics, newspaper, tea export, fast food franchises etc. Stillhe remains as an honorary chairman of the company although his group Transcom does notcapture any share today as Nestlé S.A. holds 100% share of this company.In Bangladesh Nestlé’s vision is-to be recognized as the most successful food and drinkCompany in Bangladesh, generating sustainable, profitable growth and continuously improvingresults to the benefit of shareholders and employees. 10 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 16. Customers of Nestlé Bangladesh LimitedNestlé Bangladesh Limited markets its products throughout the country with the help of thedistributors. A part from that, Nestlé Professional is a separate function which is responsible forthe institutional sale. There are currently 80 distributors of Nestlé Bangladesh products of which76 are retail distributors and remaining 4 are Nestlé Professional’s distributors providingproducts for the out of home consumptions. The whole country is divided into six regions: Dhaka North Dhaka South Chittagong Bogra Khulna Sylhet Figure1: Sales regionsThe retail distributors supply Nestlé products to four types of outlet, while Nestlé ProfessionalDistributors supply products to different institutions. Vending Site Tea Bunk Retail Distributor Mordern Trade Nestlé Bangladesh Ltd. Retail/Wholesale Nestlé 11 Institutional Sale Professional Page Figure2: Sales ProcessLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 17. Functions of Nestlé BangladeshDay by day demand and trust on the Nestlé products are growing. Focusing on the substantialgrowth and the other business perspective, the company developed its own functional areas.Currently the existing fictional areas are: General Finance and Human Management Control Resource Supply Chain Marketing Nutrition Nestlé Sales Professionals Figure3: Organizational FunctionsNo matter how many functions are running, their main aim is to gain ultimate excellence. Everyfunction contributes from their end to meet the corporate goal. The General Management takecares of the overall operation of the company and makes the key decisions. Human Resourcefocuses the management of employees and organizational culture; moreover HR professionalsare also responsible for retaining the people who are making the difference with theircompetitors at the end of the day. Supply Chain ensures the stable supply of the productsaccording to the demand of the customers. Marketing looks after the existing brands, marketshare and product development of the products. Nestlé is the world’s largest Nutrition Companythat is why the importance of the Nutrition products is much more in compared to the other foodcompanies; as a result they created a totally separate team to look after the Nutrition products,such as, CERELAC, LACTOGEN. Finance and control deals with the financial transactions andmost importantly they also apply the control mechanism to remain the company complaintfinancially and procedurally. Finally Sales and Nestlé Professionals are responsible for earningrevenue for the company, but sales goes for the retail distributors and Nestlé Professionals looks 12after the institutional sales. PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 18. Products of Nestlé BangladeshGlobally the product line of Nestlé is very large but in Bangladesh currently there are only 12products. Nestlé believes all foods and beverages can be enjoyable and play an important role ina balanced and healthy diet and lifestyle; as a result no matter how short the product line may bebut it ensures the same quality in compare to the other countries. Breakfast Beverage Culinary Dairy Nutrition Cereal Maggi, Shad- Nescafe Nido Comflex HunyGold e-Magic Nestea Coffeemate Kokocranch Lectozen Nesfuta NAN Cerelac Figure 04: Nestlé Brands in Bangladesh 13 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 19. Part Three: Organization Structure of Nestlé 14 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 20. 3.1Global Organization Structure of Nestlé Table 2: Global Organizational Structure 15 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 21. 3.2 Organization Structure of Nestlé’s in Bangladesh Figure 06: Organizational Structure in Bangladesh 16 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 22. Part Four: Strategy of Nestlé 17 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 23. 4.1 Key Success Factors  Strong brands / relationships with consumers-  Research and development-  Innovation and renovation-  Product availability-Building relations with medical and scientific community in light of Nestlé Bangladesh Ltd., thisreport tried to analyze the following components of marketing strategy through different theoriesand applications:External factors  Social: Nestlé makes an effort to integrate itself as much as possible into the cultural and social values of the different countries. During operation in Bangladesh Nestlé has launched products with integration of social & cultural factors. This has been done to match the taste buds of Bangladeshi consumers.  Ethical: Although Nestlé faces ethical dilemmas in commercialization of its products, it does not consider its high price to be an ethical crisis. This is because they are not ready to compromise their quality in order to make their product widely available to all.Internal factors  Marketing structure: Nestlé is more people, product and brand oriented than system oriented. Nestlé favors long-term successful business development and even to greater extent, customer life-time value. At the same time Nestlé does not lose sight of the necessity to improve in terms of quality, price and distribution. However, Nestlé remain conscious of satisfying the wants needs and demands of its consumers. It is also aware of the need to generate a sound profit annually. Nestlé seeks to earn consumer’s confidence, loyalty and preference and anticipate their demands through innovation and renovations. Therefore Nestlé is driven by an acute sense of performance adhering to quality and customer satisfaction Nestlé is as decentralized as possible within its marketing strategic definitions requiring increasing flexibility. Nestlé is always committed to the concept of continuous improvement of its activities and customer satisfaction through market segmentation, positioning and target 18 marketing. PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 24. The effective formulation of their marketing strategy depends on the proper match between the three key elements: o Consumer o Quality o CompetitionOne thing to be mentioned is that the match between consumer and quality is most important forNestlé. Besides there are some other concerns that effect the marketing strategy. This concernsare where to compete, how to compete and when to compete 19 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 25. 4.2 Marketing StrategyThe current marketing strategy of the company is based on the foundation of the four pillarstrategy which has the following factors:Market SegmentationNestlé is targeted towards the consumer market. So Nestlé food products can be treated asconsumer products. The major factors which play key role in the process ofconsumer segmentation are:  Demographic (age, income, etc.)  Consumption pattern  Social economic factors  Brand loyalty patters  Perceptual factors  Cultural factorsProper consideration of the given factors results in effective consumer segmentation for Nestlé.Since the product range is expensive in Bangladesh; FoysalAlam, the Marketing Officer, says,“………………………we have to concentrate strongly on income of consumers.Target marketNestlé’s main focus is the socio-economic class, which is the company wide target. Nestlé’spotential consumers are those who acknowledge that Nestlé is all about quality and mostimportantly those who can afford the products. The strategy for selecting their target market isthe following:  Income level (>10000 Tk)  Education  Quality realizationPositioning strategyNestlé’s positioning strategy comprises of the three steps:  Identifying the right competitive advantage  Choosing the right competitive advantage  Selecting the right completive advantage 20 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 26. The company then effectively communicates and delivers the chosen position to the market.Nestlé strongly believes that their products are specific and so are the product benefits. This,Foysal Alam, the marketing officer, termed as “Benefit Positioning”Regarding new upcoming products, Nestlé is looking forward to renovation and innovation forMaggi noodles and soups. This might be in terms of new flavors or improvising the quality andthe quantity of the products.Advertising and Promotional activitiesThe company focuses on its corporate image that “Nestlé is all about quality”. It hardlyemphasizes on promotion and publicity because consumers in Bangladesh already know thatensuring product quality is what Nestlé focuses, not price. Nestlé mainly focuses the twopossible advertising objectives:  Informative advertising  Persuasive advertisingSince Nestlé is already an acknowledged and quality food product company in Bangladesh, itdoes not emphasize much on publicity and promotion. Here are a few points to ponder aboutadvertising done by Nestlé Bangladesh Ltd.:  Nestlé cannot advertise for infant milk.  Mass advertising is done for new products only  Advertising and promotion is done by product wise  15% of marketing communication budget is spend for publicity  More indulged into product sampling and test marketing Nestlé had performed test sampling in the year 2003 on Nescafé.Nestlé Bangladesh Ltd. has specialized agencies for their promotional purposes. Theyare:Product name advertising agencies:  Nescafé -Unitrend  Milo - (25%) Unitrend 21  Maggi - Protishobdo Page  Polo – ProtishobdoLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 27. Nestlé is associated with the following profiles of major media types:Medium Responses  Newspapers (e.g. ProthomAlo) Small Pass along audience, approx. 1 lakh. High cost per exposure.  TV Reach up to 20 lakh audience  Billboards Very few  Local Magazines Negligible  Outdoor –The given table suggests that Cost per Contact is better in television advertisement than innewspapers and other media for Nestlé. Nestlé also believes that television receives betterclutter, fleeting, exposure and a mass audience for promotion, which is only to be considered forNestlé Bangladesh Ltd.The main advertising is done on television and to a very little extent, newspapers. The emphasisis on building a corporate image about maintaining their high quality. There are alsoconsiderations underway to promote upcoming brands and products to extend their promotionalactivities by putting up more billboards, posters, flyers, and banners. They will start internet astheir medium from year 2005. These decisions are carried out by the marketing department.Hence, Nestlé Bangladesh is trying to integrate their promotional activities and have anintegrated marketing approach 22 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 28. 4.3 Competition StructureNestlé supports free enterprise and therefore competes fairly and ethically and expects othercompany’s right to do so. The competition structure for Nestlé in Bangladesh is very limitedwhereas it faces bigger challenges in other countries such as India, china,etc. Still Nestlé tends toface competition in the food market. In terms of quality and product square is the biggestchallenge and threat. Pran is the strong contender in terms of turnover. When it comesto beverage and drinks Nestlé consider Ispahani and Cocola to be strong players. Although 70-80% consumers prefer Maggi noodles, Cocola seems to be catching up fast.In terms of competitive advantage, quality seems to be the foremost tool for Nestlé. AlthoughNestlé tends to face criticisms in terms of price and number of products sold, in comparisons tolocal competitors, Nestlé intends to abide by their policy which never attempts to compromisequality. 23 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 29. 4.4 Nestlé’s Consumer Communication and RelationshipNestlé is committed to offering consumers high-quality food products that are safe, tasty andaffordable. The Nestlé Seal of Guarantee is a symbol of this commitment.It also believes in maintaining regular contact with the consumers. This applies both to how theypresent their products and to how they address their consumers’ questions and concerns. WhenHenri Nestlé prepared his first boxes of infant formula for sale, he put his address on thepackages so people would know where to go if they had questions. Today, the ConsumerRelationship Panel with the words “Talk to Nestlé” expresses the same commitment.This is why they have a worldwide Nestlé Consumer Services network devoted to caring fortheir consumers. Nestlé’s people have expertise in a wide range of areas such as nutrition, foodscience, food safety and culinary expertise. They provide the prompt, efficient and high qualityservice that consumers expect from Nestlé.In addition, the expertise teaches them talk with consumers and above all, to listen. Listeninghelps them to understand what people want. Nestlé uses the insights gained from relationshipswith consumers to drive product development.Nestlé care for Nestlé’s consumers because its success depends on meeting their needs andexpectations. Through listening and understanding, it can make products that they will want touse all through their lives.Although Nestlé is very conscious of its role in communicating responsibility to consumers,Nestlé in Bangladesh does not really perform much consumer communication. As noted theirmarketing officer, “For Nestlé, our consumers are our distributors”. Nestlé has a separatedepartment designated as “Consumer Relation Department” where the purpose is served. A P.O.-Box had been assigned where consumers can send complaints, mails or any enquiries directly inorder to reach Nestlé. This can also be termed as “Post Purchase Service”. Consumercommunication is not much practiced in Bangladesh because at the moment, Nestlé does nothave any organized internal database of its consumers. Hence, it can be said that Nestlé hardlytakes any initiatives in case of consumer communication. 24 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 30. However, for specific brands, such as Milo, Nestlé Bangladesh has an organized database of1000 consumers who are the core that is final consumers of Nestlé. Whenever, there are anyupcoming new products, Nestlé sends these loyal consumers newsletters, leaflets, free samplesand even feedback questionnaires. This is the only consumer communication that Nestlé does inBangladesh; also consider to be Direct Marketing. For any other products Nestlé never performsconsumer communication. 25 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 31. 4.5 Retaining Old Customer or Attracting New Ones?For Nestlé, it is a 60-40 ratio. They believe whoever is loyal, Nestlé should do their best to retaintheir loyalty because if this loyal consumers become disloyal their word-of-mouth maycontaminate other eager consumers. So, Nestlé emphasizes more on retaining loyalty rather thanattracting new consumers.Customer Satisfaction LevelNestlé regards its consumers as its most valuable asset involvement at all levels start with opencommunication whether it deals with customer satisfaction or their needs and wants. Nestlérecognizes that its consumers have a sincere and loyal interest in the behavior, beliefs, andactions of the company behind brands in which they place their trust. With it consumers thecompany would not exist. Nestlé satisfies consumers in many countries and cultures throughoutthe world. According to the Marketing officer Nestlé Bangladesh Ltd, customer satisfactionvaries from one aspect to another. In terms of product delivery consumers do not give similarresponses. He explained with the simple example, Nescafé for some is refreshment, for others itis relief. At the end of the day, Nestlé consumer are 100% satisfied with the high quality ofNestlé products. 26 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 32. 4.6 Market AuditThe marketing audit is divided in 1. External Audit 2. Internal Audit o Opportunities o Strength o Threats o WeaknessExternal Audit: Scanning the external environment of Nestlé, we tried to find out theopportunities and threats that are pointed out here:  Opportunities: The ability to expand their product line that requires an approach that is compatible with Nestlé’s strengths and that compensates for its weaknesses, e.g. to make certain products available in the market at a relatively lower price so that a larger number of consumers can buy it………products such as Cerelac. Enhance distribution of their Infant Nutrition Products in a country like Bangladesh where malnutrition already exists, increasing the distribution channels and channel outlets.  Threats: Few local manufacturers who tend to sale their products at a relatively lower price through various unethical means. For instant, many do not value expiry dates since not much restrictions are practiced in Bangladesh.High degree of bargaining power of suppliers.Internal Audit:Then we tried to analyze the internal situation of Nestlé and we figured out the followingstrengths and weaknesses:  Strengths: o A portfolio of products which responds to the consumer trend for lighter yet indulgent snacking o A unique strategic position which combines powerful local brands with strong global product brands o Dedicated core staff who are willing to provide significant labor hours to accomplish 27 targets Page o Centralized organization that helps in easier coordination of business activitiesLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 33.  Nestlé Weaknesses: o Far fewer staff than actually required in terms of tasks to be completed. o Significantly less customer support services than is required in terms of the number of customers and the complexity of the services offered. o Except form Milo, they have no post purchase service for other products in Bangladesh.Another Approach toward Strengths; Weaknesses Apart from conducting the SWOT analysis,under marketing assessment, a different approach is taken to make an in depth analysis aboutNestlé. In this approach, first, some core factors are identified against which the performance orrelative strength or weakness of Nestlé can be measured. These factors include: a. Marketing Factors b. Manufacturing Factors c. Organizational FactorsBut these factors are too broad. So, further some criteria were developed for each factor to beevaluated. Then the relative weaknesses or strengths are measured against each criterion that issummarized here in a tabular format: Weaknesses Strengths Fundamental Marginal Marginal Fundamental Neutral Strength Strength Weakness Weakness 28 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 34. Performance Measurement CriterionMarketing Factors: Manufacturing actors: Organizational Factors:•Relative Market •Production facilities •Culture•Reputation •Flexibility •Leadership•Previous Performance •Workforce •Managerial capabilities•Competitive Stance •Technical skill •Workforce•Customer Loyalty •Delivery capabilities •Flexibility•Depth of product range •Adaptability•Product quality•New product program•Distribution cost•Dealer network•Geographical coverage•Sales force•After sales service•Manufacturing cost•Pricing•Advertising•Structure of competition 29 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 35. 4.7 Nestlé’s Commitment to Environmentally Sound Business PracticesNestlé respects the environment, supports sustainable development and is committed toenvironmentally sound business practices throughout the world. To fulfill this commitment,Nestlé:  integrates environmental principles, programmes and practices into each business;  strives for the continuous improvement of its environmental performance through application of the Nestlé Environmental Management System (NEMS);  Complies with applicable environmental legislation. Where none exist, Nestlé’s own internal rules are applied; and  Provides appropriate information, communication and training to build internal and external understanding concerning the Company’s environmental commitment. 30 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 36. 4.8 The Supply ChainBringing a food product to the consumer involves a continuous process from farm to table.Integrated measures for preserving the environment, and consequently for optimizing globalenvironmental benefits, are put in place along the supply chain. Nestlé endeavors to apply thefollowing practices to meet its environmental commitment.Raw Materials:In general, Nestlé is not directly involved in the production of raw materials. Wherever possible,locally available raw materials are used. They are either obtained directly from producers orpurchased through trade channels. Nestlé applies the following principles when sourcing rawmaterials: all raw materials must meet both legal and internal quality criteria, including limits onpossible environmental contaminants; whenever possible, preference is given to raw materialsthat are produced by environmentally sound farming methods (e.g. integrated crop management);and farmers are encouraged to apply sustainable farming methods and, where appropriate, areprovided with assistance in crop production and dairy farming. Such assistance includes theprovision of recommendations for the conservation of natural resources (soil, water, air, energy,and biodiversity) and techniques for reducing environmental impact.Manufacturing:Manufacturing comprises all processes that are necessary to transform perishable raw materialsinto safe and convenient food products for consumers. Nestlé strives to achieve optimalperformance in its manufacturing activities, including the environmental aspects. As such, themanufacturing practices of the Group: Respect natural resources by emphasizing the efficient use of raw materials, water and energy; Minimize the use of environmentally critical substances; Continuously seek improvement in the efficiency of production facilities; and Reduce waste generation and emissions as much as possible; consider recycling of waste as a 31 priority and dispose of non-recyclable waste in an environmentally sound manner. PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 37. Regular environmental assessments of Nestlé’s manufacturing practices are conducted to: Evaluate factory performance; Review factory compliance with applicable legislation and Nestlé’s own standards; Packaging fully investigate incidents that could affect the environment and take relevant measures; and Compare results with previous targets and set new improvement objectives.In addition, Nestlé exchanges information on environmental protection technology and practicesin order to ensure a wide use of best practices. Nestlé encourages its contract manufacturers touse environmentally sound manufacturing practices.Packaging serves a major role in our daily lives. It protects food products from spoilage andensures safety from manufacture through storage, distribution and consumption. Packaging mayalso provide tamper-evidence features. It communicates information, including nutritionalinformation and serving instructions, and provides the convenience demanded by today’sconsumers. Nestlé is committed to reducing the environmental impact of packaging, withoutjeopardizing the safety, quality or consumer acceptance of its products. It is Nestlé’s objective todevelop safe and wholesome packaged foods using the most efficient and appropriate packagingmaterials available, while, at the same time, satisfying consumer requirements and expectations.Nestlé seeks packaging solutions that: result in the lowest possible weight and volume of packages; take into account new packaging materials and processes that reduce the impact on the environment; avoid the use of substances that can adversely impact the environment during packaging production and disposal; decrease packaging waste at all stages, including package manufacturing, utilization and disposal; increase the use of recycled materials wherever possible; and Increase the recyclables and compatibility of its packages with existing waste management schemes. 32 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 38. Regular assessments of Nestlé’s packaging are carried out and action plans are implemented.Nestlé supports industrial and governmental efforts to promote integrated waste managementthat takes into consideration matters such as source reduction, reuse, recycling, composting,energy recovery and landfill. Nestlé encourages suppliers of its packaging materials to adoptsound environmental practicesDistribution MarketingDistribution of products from the factory to the customer involves transport and storage.Efficient management of the distribution system is essential to preserve the safety and quality ofNestlé’s products, to ensure a high level of customer service, and to meet its commitment toenvironmentally sound business practices. To this end, Nestlé:  selects appropriate transportation modes, with particular attention given to optimum unit loads (pallets), vehicle capacity utilization, route planning and consolidation with outside partners, scheduling and fuel conservation;  optimizes warehouse and distribution center locations and environmentally efficient operational systems; and  Identifies and implements measures to reduce energy consumption and waste.Nestlé encourages its distribution service providers to use environmentally sound practices.Marketing is based on the principle of satisfying consumers’ needs. The overall trustof consumers in Nestlé’s brands and products comes from a quality image that has beenContinuously strengthened for over 130 years. Nestlé strives to increase this trust through itscommitment to environmentally sound business practices. For this reason, Nestlé:bases environmental claims in advertising, promotional material, labeling and corporatecommunications on solid scientific evidence; and selects materials and printing methods formerchandising materials such as consumer offers, in-store promotions, display materials, leafletsand printed materials in light of environmental considerations. 33 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 39. 4.9 What Makes Nestlé to Become Nestlé? • Inherited attitude • Appreciation of the individual • Understanding, knowledge and ideas • The pull of its brands • People and relationship drivenFlood relief Nestlé Bangladesh donates products to support the Prime Minister’s Relief Fund ofBangladesh which helps victims of floods and other natural disasters. The Company also assistswith fund-raising efforts for the Flood Relief fund.Medical supportThe Company contributes to the Floating Hospital Project which provides medical assistance forthe poorest of the poor people.Food supportThe Company also runs a feeding programme for a school, established for the under- privilegedchildren of Dhaka city slums. Under this programme, food is supplied twice a week for thestudents.Sports Development ProgrammeCricket is the most popular sport in Bangladesh. Nestlé Bangladesh has stepped forward togetherwith the Bangladesh Cricket Board (BCB) to develop cricket talent for the future under a specialsponsorship programme. Milo will sponsor a series of local cricket development camps andtournaments, to be organized by BCB for the under 13 and under 15 age groups. Through thisspecific programme, a pool of young talented cricketers will be identified to ultimately representBangladesh internationally. 34 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 40. 4.10 ConclusionFinally it can be said that that Nestlé Bangladesh Limited is using and developing their strategyperfectly. By using valuable marketing tools they are creating competitive advantage forthemselves which ultimately helping them to reach their market as well as organizationalobjectives. Again their continuous renovation are making them leader into the market whichleads to profit as well as customer base for their company. 35 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 41. Part Five: Appendices 36 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh
  • 42. References  Corporate Governance report 2011  The Nestlé Corporate Business Principles 2010  Annual Report 2011  Quick Facts 2011  Nestlé Management report 2011  Nestlé Sustainability Review  Nestlé People Development Review  Corporate Business Principles  Million Years of the Food Industry  The Nestle Management and Leadership Principles  Nestle Policy on the Environment 37 PageLocal Business Policies of Nestlé Bangladesh Ltd.Independent University, Bangladesh